Teaching kids about money, investments

Thursday

Apr 28, 2011 at 12:01 AMApr 28, 2011 at 12:17 PM

April is Financial Literacy Month, a timely reminder to take steps to raise fiscally savvy children. Financial planner Tom Henske, founder of the Money Smart Kids Program in Ohio, advises focusing on four pillars: saving, spending, donating and investing. For the very young, Henske says start with a piggy bank and a library card.

Saimi Bergmann

Children are never too young to learn about money, experts say, because financial habits start early.

“Just like you teach your kids about manners, respecting others — the money lessons should be a significant part of that,” said Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio.

“I’d go a step farther. Contributing to society, whether with money or a gift of their time, is an important element kids should be familiar with. Volunteering at nursing homes, shelters, puts money in perspective,” said McGervey. “Doing service work in the community, they can see for themselves how hard others may have it — a great way for them to connect the dots.”

April is Financial Literacy Month, a timely reminder to take steps to raise fiscally savvy children.

Financial planner Tom Henske, founder of the Money Smart Kids Program in Ohio, advises focusing on four pillars: saving, spending, donating and investing. For the very young, Henske says start with a piggy bank and a library card.

“Children should practice using their library cards as their first form of credit card,” Henske says. “It’s swiped in exchange for books at no cost unless you’re late to return them. Late fees add up, similar to not paying back all your credit card charges on time and owing interest.”

Early lesson

Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio, and father of four children ages 12 to 19, said the greatest financial gift parents can give their children is to teach them how to work.

“They begin to develop an appreciation of what it takes, how hard it is to earn money and get a further appreciation for how easy it is to spend through their earnings,” McGervey said. “I see this in my older kids, motivating them to seek opportunities to earn more, work harder or begin to table some of their wants.”

Those early habits, McGervey said, eventually differentiate adults into two groups: “The type of clients we typically work with, and those who end up in that vicious circle of never being able to get ahead.”

Older teens should learn about budgeting, credit scores and investing, according to Joan Stafford, financial counselor in the Office for Financial Success at Missouri University. Stafford presents the program “Top 10 Teen Financial Tips” to high school students.

“In Missouri, they have to take a personal finance class in order to graduate, so that’s our way in, talking to those classes,” she Stafford. “There’s a handful in every class that you can tell their parents talked to them about finances, but most are clueless about money.”

Budget at early age

Joan Stafford, financial counselor in the Office for Financial Success at Missouri University, said her father had her write a budget when she was just 13 years old.

“I want to give that same kind of knowledge to these kids,” she said.

How in the world do you convince a high school student to create a budget?

“We focus on goals — buying a new car, saving a few thousand for college,” Stafford said. “If they don’t have a goal, they won’t stick to it. There’s no motivation.”

Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio, says children should have bank accounts and debit cards, but not credit cards.

“A debit card could be a great way for children to get a handle on the idea that any time you spend, it’s coming out of the other pocket; that it’s not an endless supply,” he said.

The experts agreed one of the most important lessons parents can share is the effect of starting to invest while young.

“The power of compounding if you start at that age is phenomenal,” McGervey said. “It’s important for kids to grasp that and the difference it could make to their lives.”

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.